SANTA FE, N.M. (AP) — New Mexico can continue to freeze payments to behavioral health services providers that are under investigation for possible overbillings, mismanagement and fraud, a federal judge ruled Thursday.
U.S. District Judge M. Christina Armijo denied a request from eight nonprofit providers for a restraining order to stop the state Human Services Department from withholding Medicaid payments for mental health and substance abuse services to needy New Mexicans.
The providers wanted payments to resume while the state gives them a hearing to address the allegations of billing problems.
The department suspended payments last month to more than a dozen nonprofit organizations after an audit flagged potential problems. The agency said federal regulations required it to halt the payments and turn over the allegations to the attorney general's office to investigate.
The department has restored full or partial funding to three of the behavioral health providers after they asked for "good cause" exceptions to the Medicaid payment freeze. Similar requests from other providers were denied.
In a written order, Armijo said the providers "failed to show that an injunction requiring a prompt name-clearing hearing is not adverse to the public interest."
The department contends that premature disclosure of the allegations in the audit could compromise the attorney general's investigation, which officials say could take two to three months.
The judge's ruling came as a legislative committee heard testimony from social services advocates who warned that the payment freeze would seriously disrupt behavioral health services to Medicaid recipients.
"These companies are running out of money and they are going under because they don't have any money," said Jim Ogle of the National Alliance on Mental Illness-New Mexico. "And in the end, it's the consumer that's going to lose here."
The department contends it has taken steps to continue services. Contracts have been signed with five providers from Arizona to step in and provide assistance.
"A federal judge today confirmed that we acted properly after finding credible allegations of fraud, waste, and abuse in the system, while protecting Medicaid funding for those in need. As law enforcement determines their next step, our top priority continues to be ensuring uninterrupted access to care for Medicaid patients," Matt Kennicott, a department spokesman, said in a statement.
However, members of the Legislative Health and Human Services Committee expressed frustration with the department's decision not to keep payments flowing while the investigation is underway. They questioned whether the out-of-state companies could quickly find clinical staff with needed credentials to provide services, although the companies hope to hire the nonprofits' current workers.
Sen. Gerald Ortiz y Pino, an Albuquerque Democrat and committee vice chairman, said the behavioral health treatment system in New Mexico will be devastated by the loss of the nonprofit providers before the allegations against them are resolved.
"These agencies are going to be dead in two to three months. This is not just an allegation. This is an execution," he said.
The judge acknowledged that her ruling affected not only the nonprofit providers but a "silent class of particularly vulnerable individuals who are in need of mental health services provided by plaintiffs."
"It is a concern of this court that despite HSD's efforts to ensure continuity of care, as represented by its counsel at hearing, there could be a disruption of the delivery of critical mental health services in some instances," Armijo said. "The court is not insensitive to this outcome, but is constrained by the prevailing law and the credible allegations of fraud against" the providers.
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